in places like Kariobangi Light
Industries which is a good case
study for increasing manufacturing
contribution to the economy. Neither
can I say it doesn’t happen there.
You have spent millions and probably
billions promoting your brand, only
for someone else to leverage on it to
make billions. One of the reasons
for the frequent re-branding by
FMCG’s brands is to catch up with
the bandits.
In my last column we highlighted
how a brand manager for a powder
detergent was surprised to find that
her grandmother was doing booming
business packing her brand for the
bandit economy.
This reminds me of a common joke
we have when we go to have a drink
at DOD in Hurligham, we normally
explain to the soldiers that we are
just neighbors from the next door
Salvation Army ( Jeshi la Wokovu
is Swahili). The idea here is that we
are still ‘part’ of the armed forces but
from the civilian side and we deserve
subsi dized drinks.
The point here is that banditry in this
market is so common that in some
areas the bandits or fake products are
market leaders. Just as explained in
the previous article there is genuine
fake and grey products that are
diverted from the markets they were
developed for. From sugar to soft
drinks to alcohol, there are so many
of them.
‘‘ According to a
study by the Kenya
Association of
Manufacturers their
members lose about
40% of their market
share to the bandit
economy who fake
their products.’’
The other point is that we can’t
ignore alternatives to our products
because sometimes the alternatives
become the mainstream.
Non-uniform Taxes, Strong
Shilling and entrepreneurship to
blame for Illegal imports
I have previously suggested that the
treasury and KRA should be very
careful when increasing some taxes
without regard to the impact that
can have on consumption habits and
other market aspects.
With porous borders taxes that are
higher than those charged in the
neighboring countries are likely to
make imported products from those
countries more attractive.
With the Kenya Shillings being
stronger than the currencies from the
neighboring countries those products
become even cheaper. We collect
more taxes per unit but kill jobs as we
import similar or substitute products
from the neighboring countries.
One of my recent discoveries is that
consumers don’t necessarily benefit.
In many cases the importer or faker
charges the market price for branded
products and in some cases a higher
price meaning they make higher
margins in conjunction with the
distribution partners. This is equivalent
to killing manufacturing jobs.
20 MAL 12/16 ISSUE